Correlation Between PLDT and Millicom International
Can any of the company-specific risk be diversified away by investing in both PLDT and Millicom International at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining PLDT and Millicom International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PLDT Inc ADR and Millicom International Cellular, you can compare the effects of market volatilities on PLDT and Millicom International and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in PLDT with a short position of Millicom International. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLDT and Millicom International.
Diversification Opportunities for PLDT and Millicom International
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PLDT and Millicom is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding PLDT Inc ADR and Millicom International Cellula in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Millicom International and PLDT is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on PLDT Inc ADR are associated (or correlated) with Millicom International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Millicom International has no effect on the direction of PLDT i.e., PLDT and Millicom International go up and down completely randomly.
Pair Corralation between PLDT and Millicom International
Considering the 90-day investment horizon PLDT is expected to generate 2.74 times less return on investment than Millicom International. But when comparing it to its historical volatility, PLDT Inc ADR is 1.21 times less risky than Millicom International. It trades about 0.02 of its potential returns per unit of risk. Millicom International Cellular is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,866 in Millicom International Cellular on November 9, 2024 and sell it today you would earn a total of 807.00 from holding Millicom International Cellular or generate 43.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PLDT Inc ADR vs. Millicom International Cellula
Performance |
| Timeline |
| PLDT Inc ADR |
| Millicom International |
PLDT and Millicom International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PLDT and Millicom International
The main advantage of trading using opposite PLDT and Millicom International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PLDT position performs unexpectedly, Millicom International can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Millicom International will offset losses from the drop in Millicom International's long position.| PLDT vs. KT Corporation | PLDT vs. Telefonica Brasil SA | PLDT vs. TIM Participacoes SA | PLDT vs. SK Telecom Co |
| Millicom International vs. KT Corporation | Millicom International vs. Telkom Indonesia Tbk | Millicom International vs. SK Telecom Co | Millicom International vs. PLDT Inc ADR |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Global Correlations module to find global opportunities by holding instruments from different markets.
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